Shares rise ahead of debt decision

GLOBAL SHARE prices edged up while the single market currency remained steady yesterday as the markets awaited announcements from the European Central Bank and the US Federal Reserve.

Investors and traders are pinning their hopes on action from the Federal Reserve and ECB to combat the ongoing debt crisis.

DUBLIN

IN CONTRAST to Europe and the US, the Iseq Index of Irish shares closed down 0.8 per cent to finish at 3,143.

Shares in Smurfit advanced to close at €6.17 yesterday, valuing the group at more than €1.3 billion. The packaging group yesterday announced a drop of 1 per cent in earnings in the first half of the year, as margins in its recycled paper operations fell.

Aer Lingus stocks fell 0.46 per cent to €1.08, on higher trading volumes. Unions representing workers in Aer Lingus yesterday voted for industrial action over pension reforms. The company plans to change pension arrangements. Elsewhere, shares in buildings material giant CRH declined 1.14 per cent to €4.013, while pharma group Elan was down 4.8 per cent to €9.11.

On a more positive note, Abbey, Grafton and Kingspan all made gains of between 3 and 9 per cent.

LONDON

THE POUND fell to a two-week low against the euro after an industry report showed UK manufacturing shrank the most in three years in July, adding to signs Britain’s recession is deepening. Sterling dropped at least 0.4 per cent against all 16 of its major counterparts after Nationwide Building Society said house prices recorded their biggest annual decline since August 2009. UK government bonds also declined.

THE UK’s FTSE 100 however, gained 1 per cent.

Next jumped 7.2 per cent as the clothing retailer increased its annual profit forecast after reporting first-half sales that rose more than analysts estimated, driven by a surge in online and catalogue sales.

Standard Chartered added 5.2 per cent to 1,540 pence, the largest advance since December, after the UK bank that gets most of its revenue from Asia posted an 11 per cent increase in first-half profit. Rightmove, the UK’s biggest residential property Web site, gained 13 per cent to 1,684 pence, after posting a 28 per cent increase in underlying operating profit.

EUROPE

EUROPEAN STOCKS rose for the fourth time in five days as speculation central banks will take further steps to support the economic recovery outweighed the biggest contraction in UK manufacturing for three years.

Arkema climbed 5.3 per cent to €63.02 after the French chemicals company reported second-quarter earnings before interest, taxes, depreciation, and amortization of €306 million, beating analyst estimates of €272.6 million. The CAC in France rose 0.9 per cent to 3,322.

In Germany, Bayerische Motoren Werke slid 3.3 per cent to €58.79. The world’s largest maker of luxury cars reported a 19 per cent drop in second-quarter profit amid increased spending on new models and “intense” pricing competition. Germany’s DAX slipped 0.2 per cent.

The Euro zones blue chip Euro Stoxx 50 index was 0.3 per cent firmer at 2,333.38, while the Stoxx Europe 600 Index gained 0.4 percent to 262.57. The number of shares changing hands in Stoxx 600 companies was 32 per cent lower than the 30-day average.

Markets in Switzerland were closed for a holiday.

US

US STOCKS rose, halting a two-day decline in the Standard and Poor’s 500 Index, as investors awaited the outcome of the Federal Reserve’s meeting for clues on more stimulus measures to support the world’s largest economy.

Fed chairman Ben S Bernanke will probably forgo announcing a third round of large-scale asset purchases today and may wait until September to unveil plans to buy debt, economists speculated.

Early swings that exceeded 10 per cent in dozens of US stocks, without accompanying news, spurred speculation that a computer programme was affecting prices. Broker Knight Capital Group said it was looking into the trading.

Goodyear Tire and Rubber Co rose more than 10 per cent in the minutes after the 9.30am open in New York. Manitowoc gained 14 per cent, Pandora Media climbed almost 11 per cent and Level 3 Communications plunged 15 per cent before the swings narrowed minutes later.

Facebook dropped as much as 3.9 per cent to a record low, the fourth straight day of declines after the world’s largest social-networking service reported second-quarter results that showed slowing growth. Shares slipped 2.7 per cent to $21.13 at 10.08am in New York, and earlier touched $20.87 for the biggest decline since Facebook held an initial public offering on May 17th. –